Monday, 17 September 2012

China IRS Higher; Inflationary Pressure Eyed


China onshore IRS are higher as many investors believe rising inflationary pressure will give the PBOC even less room to cut policy rates or banks' reverse requirement ratio in the near term. The one-year IRS is 2 bps higher at 3.19%-3.29%, the five-year IRS is 4 bps higher at 3.32%-3.42%. "The reverse repo rate's recent downtrend suggests that short-term swaps will see limited upside," says a Shanghai-based local bank trader. He adds the long-term swaps may rise along with long-term bond yields.

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